According to Swiss Re’s latest “World insurance in 2009” sigma study, world insurance premium volume fell 1.1% on an inflation-adjusted basis. Life premiums fell 2% while non-life stagnated. Premium growth in the emerging markets slowed but remained positive. The industry’s profitability and capital recovered significantly, but have not yet reached pre-crisis levels.

In most countries, insurance premiums grew faster than GDP in 2009, which shows the robustness of the industry. As credit and stock markets recovered, the industry’s profitability and capital improved. For 2010, overall premium growth is expected to turn positive. Profitability and capital will in all likelihood continue to improve.

Global life premiums fall 2% but results vary by regionGlobal life insurance premiums fell 2% to USD 2 332 billion in 2009. Premiums were hardest hit in the US and the UK as the financial crisis severely impacted the sale of unit-linked products, particularly in the first half of the year. Daniel Staib, one of the authors of the new sigma study, said: “Despite the slight overall decline in global life premiums, the life business in Italy, Germany and France improved as sales of traditional life policies with guarantees rebounded. These products were perceived as particularly attractive when compared with bank products, given the low interest rates and uncertainty of the financial markets.”

In the emerging markets, life premiums rose 3.4%. Growth was the strongest in South & East Asia at 10%, led by China and India. Life premium growth in Latin America and the Caribbean was also solid at 7.8%. The Brazilian life market performed exceptionally well due to the rise in popularity of VGBL (Vida Gerador de Beneficios Livre), a unit-linked savings product.Non-life premium development was flat in 2009Non-life insurance business was only marginally impacted by the global recession. Premiums in non-life dipped just 0.1% in 2009 to USD 1 735 billion, mainly due to sluggish demand for cover and softening rates. Staib said: “While lower prices in non-life hurt profitability in 2009, there was an improvement compared to 2008, due to the recovery of credit and equity markets.”

Non-life premiums fell in the US, the UK and Japan, but rose in the emerging market countries. For example, non-life premiums in China grew by 19%. Staib said, “Stable premiums and the recovery of profitability and capital are good results given the difficult economic environment in 2009. What concerns us, however, is that underlying technical results tended to weaken.” The study shows that in eight major markets, which represent 70% of global premium volume, underwriting results turned negative in 2009, despite lower natural catastrophe losses and lower losses related to the US financial guarantee business.

Outlook: recovery will continue in 2010As the world economy continues to improve, premiums are expected to rise. “Overall premium growth in the industry will turn positive in 2010 and the industry’s profitability and capital should continue to improve,” said Staib. The life business in particular will benefit. Staib adds, “If financial markets continue to recover, the hard hit unit-linked business will also show a strong upward trend . Over the longer term, life insurance will benefit from the ageing of the population, which will boost the sales of pension, disability, critical illness and long-term care products.”

Growth of the non-life business in the industrialised countries is also expected to resume. Daniel Staib said, “Given the strong competitive pressures in the insurance industry, it will be difficult to improve profitability significantly. We have also already seen some costly natural catastrophes this year, which will impact technical results. Besides the rise in premium rates, what is needed to bring the primary non-life insurance industry back to adequate profitability levels is the expected rise in interest rates in the medium term.”

After a construction time of only two years, Siemens & Halske began operating the Indo-European telegraph line (Indo-line) in 1870. The route was over 11,000 km long and extended from London to Calcutta.

A dispatch to Teheran required only one minute, while it took a sensational 28 minutes to reach Calcutta.

Siemens was founded by Werner von Siemens on 12 October 1847. Based on the telegraph, his invention used a needle to point to the sequence of letters, instead of using Morse code. The company, then called Telegraphen-Bauanstalt von Siemens & Halske, opened its first workshop on October 12.

In 1848, the company built the first long-distance telegraph line in Europe; 500 km from Berlin to Frankfurt am Main. In 1850 the founder’s younger brother, Carl Wilhelm Siemens started to represent the company in London. In the 1850s, the company was involved in building long distance telegraph networks in Russia. In 1855, a company branch headed by another brother, Carl Heinrich von Siemens, opened in St Petersburg, Russia. In 1867, Siemens completed the monumental Indo-European (Calcutta to London) telegraph line.[5]

At their meeting in Basel this weekend, the central bank Governors of the Global Economy Meeting (GEM)[1] appointed Mark Carney as Chairman of the Committee on the Global Financial System (CGFS). Mr Carney is Governor of the Bank of Canada.

Mr Carney’s appointment as Chairman of the CGFS is for a term of three years starting on 1 July 2010. He succeeds Donald L Kohn, who has been CGFS Chairman since July 2006 and is retiring as Vice Chairman of the Board of Governors of the Federal Reserve System.

Mark Carney has been Governor of the Bank of Canada since February 2008. After 13 years in the private sector, he was appointed Deputy Governor of the Bank of Canada in 2003, and then served as Senior Associate Deputy Minister of Finance from 2004 until his appointment as Governor of the Bank. Mr Carney has a doctorate in economics from Oxford University.

The CGFS is a central bank forum for monitoring and examining broad issues relating to financial markets and systems, with a view to elaborating policy recommendations to support central banks in the fulfilment of their responsibilities for monetary and financial stability. Further information about the CGFS may be found on the BIS website at www.bis.org/cgfs/index.htm.

[1] The members of the GEM consist of Governors from 30 BIS shareholding central banks: the central bank Governors of Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, the Netherlands, Poland, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States and also the President of the European Central Bank and the President of the Federal Reserve Bank of New York.